Real Estate Investment Schemes

As news has spread of a possible bottom being reached in the U.S. housing market, the popularity of investment offerings involving distressed real estate has continued to increase.  While legitimate real estate investments can be an important component of a diversified portfolio, investors should be aware that schemes related to buying, renovating, flipping or pooling distressed properties are also popular with con artists.  In a recent survey of the states, real estate fraud was ranked as the third most common product or practice leading to investigations and enforcement actions.

Even with legitimate real estate investments, there are substantial risks with properties that are bank-owned, pending short-sale, or in foreclosure.  And the field is littered with scam artists intent on fleecing middle-class investors.  In October 2011, Utah regulators took action against a man that solicited $4 million from investors to purchase and refurbish properties and provide a “diversified portfolio” of hard-money loans.  Investors were given personal guarantees and promised minimum returns of 18 percent per year in an investment with risk that was “literally zero,” but in reality, the funds were directed to a single, highly leveraged, development project that went bust.  As with all investments, careful vetting and due diligence is a must with real estate investments.

Department Contacts

Enforcement Contact (Kelly)

Kelly Mathias

Supervisor Investigations & Examinations
600 East Boulevard Avenue State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone:
(701) 328-2929
Toll Free:
(800) 297-5124
Fax:
(701) 328-0149
Enforcement Contact (Doug)

Doug Smith

Investigator
600 East Boulevard Avenue State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone:
(701) 328-2926
Toll Free:
(800) 297-5124
Fax:
(701) 328-0148
Enforcement Contact (Rachel)

Rachel Rice

Investigator
Grafton Satellite Office
701 W. 6th Street, #312
Grafton , ND 58237
Phone:
(701) 352-4592
Fax:
(701) 328-0126
Email:
Enforcement Contact (Michael)

Michael F. Daley

Attorney/Deputy Commissioner
600 East Boulevard Avenue State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone:
(701) 328-4701
Toll Free:
(800) 297-5124
Fax:
(701) 328-0127